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SECOND DIVISION

BUREAU OF INTERNAL G.R. No. 204226

REVENUE,
Petitioner, Present:

PERLAS-BERNABE, S.A.J,
Chairperson,
HERNANDO,
- versus - LOPEZ, J.Y.,*
DIMAAMPAO,* and
MARQUEZ,JJ

TICO INSURANCE
COMPANY, INC., GLOWIDE,
ENTERPRISES, INC., and Promulgated:
PACIFIC MILLS, INC.,
Respondents. APR 18 2022 ~
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

HERNANDO, J.:

This resolves a Petition for Review on Certiorari 1 filed by petitioner

Bureau of Internal Revenue (BIR) assailing the December 16, 2011 Decision2
and October 22, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV.
No. 91856. The CA reversed and set aside the March 25, 2008 Decision4 of
Regional Trial Court ofMakati, Branch 147 (RTC Makati), thereby ruling that

• Designated additional Members per March 7, 2022 Raffle vice J. Zalameda and L Rosario, respectively,
who recused from participating in this case due to prior action in the Court of Appeals.
1
Rollo, pp. 10-39.
2
Id. at 43-58. Penned by Associate Justice Hakim S. Abdulwahid and concurred in by Associate Justices
Marlene Gonzales-Sison and Leonica Real-Dimagiba.
3
Id. at 59-60.
4
Id. at 181-182. Penned by Presiding Judge Maria Cristina J. Cornejo.
Decision 2 G.R. No. 204226 ,.

the claim of Glowide Enterprises, Inc. (Glowide) and Pacific Mills, Inc.' (PNII),
over the subject condominium units, is superior to the BIR's claim. ·

The Antecedent Facts:

Respondent TICO Insurance Company, Inc. (TICO) is an insurance

company duly organized and existing under Philippine laws. It is engaged in the
sale of life insurance until it was placed under liquidation by the Insurance
Commission in 2002. Respondents Glowide and PMI are clients of TICO that
took out a fire insurance policy over several properties in 1997. 5

On August 7, 2006, respondent TICO filed a Complaint6 for interpleader

with the RTC Makati to determine who between respondents Glowide and PMI,
on one hand, and petitioner BIR on the other, has a superior right over Units 7A
and 7B of the Trafalgar Plaza Condominium covered by Condominium
Certificates of Title (CCT) Nos. 39452 and 39453 and registered under TICO's
name. TICO alleged that Glowide and PMI had attached the condominium units
to cover their claim for the balance of their insurance proceeds after they had
obtained a judgment in their favor, while the BIR issued a warrant of distraint
and/or levy on the real and personal properties ofTICO, and a notice of tax lien
covering the condominium units, to answer for TICO's tax liabilities. The case
was docketed as Special Civil Action No. 06-667 and heard by the RTC Makati. 7

Glowide and PMI's Claims:

While Glowide and PMI' s fire insurance policy with TICO over certain
properties was in effect, a fire broke out that destroyed the said properties. 8 Due
to TICO's failure to pay the full amount of the insurance proceeds despite
demand, Glowide and PMI filed a Complaint for sum of money and damages,
with prayer for a writ of preliminary attachment against TICO before the RTC
of Quezon City, Branch 98 (RTC QC), docketed as Civil Case No. Q-00-42328. 9

The RTC QC, in its November 23, 2000 Order, granted Glowide and PMI's
application for the issuance of a writ of preliminary attachment to attach all
properties of TICO as would be sufficient to satisfy its principal claim. On
December 22, 2000, the corresponding notice of levy on attachment was issued
on TICO's condominium units covered by CCT Nos. 39452 and 39453. 10

In its October 3, 2001 Judgment, the RTC QC ordered TICO to pay

Glowide and PMI the amount of P5,442,209.97 plus interest, attorney's fees,
and costs of suit. 11 On January 8, 2002, Glowide and PMI moved for execution

5
Id. at 43, 98.
6
Id. at 44.
7 Id. at 13-14.
8
Id. at 98.
9
Id.
io Id.
11 Id. at 156-157.
Decision 3 G.R. No. 204226

of t~e Octobpr 3, 2001 Judgment as a matter of right, averring that TICO has
rece1v:d a c~EY of the October 3, 200~ J~dgment, and has not filed a motion for
recon~1d~rat1on or appeal from the said Judgment. The motion for execution of
1

the said Judgment was granted, the corresponding writ of execution was issued
on June 3, ioo2, and the notices of levy on execution were subsequently
annotated onlCCT Nos. 39452 and 39453 on June 13, 2002. 12

Meanwhile, on April 22, 2002, the Insurance Commission placed TICO

under liquid1tion, and appointed Atty. Rommel A. Frias as liquidator. TICO
moved to ho~d in abeyance the implementation of the writ of execution, and
filed a petition for relief from judgment and writ of execution. In its September
3, 2003 Ordir, the RTC QC ruled that the petition for relief was filed out of
time. TICO 11,:oved for reconside~ation ?!aiming, among others, that it has ~ax
assessments :from 1996-1998 which enJoy preference above all other credits,
and the enforcement of the writ of execution would prejudice TICO's other
creditors, and violate the laws on preference of credits, which was denied by the
I

RTC QC in its February 16, 2004 Order. 13 In so ruling, the RTC QC noted that
Glowide and PMI's claims are preferred over the BIR's claims since tax
assessments are not preferred credits in reference to specific immovable
property. 14

TI CO assailed the September 3, 2003 and February 16, 2004 Orders of the
1

RTC QC via a Petition for Certiorari. In its August 23, 2007 Decision, the CA
in CA-G.R. SP No. 83365 dismissed TICO's petition, finding that the RTC QC
did not commit grave abuse of discretion when it issued the assailed Orders.
TICO no longer appealed the said CA Decision. 15

In the meantime, the sheriff issued on March 17, 2004 a notice of sheriff's
sale covering the condominium units, and set the auction sale on April 14, 2004.
The condominium units were sold to Glowide and PMI as the highest bidders,
and the corresponding certificate of sale was issued. The certificate of sale was
annotated on CCT Nos. 39452 and 39453 on April 15, 2004. After the lapse of
the redemption period without any redemption being made, the sheriff of RTC
QC executed the corresponding final deed of sale in favor of Glowide and PMI
on April 15, 2005. 16

Moreover, Glowide and PMI questioned the propriety of the interpleader

case. They contended that they had acquired all rights and interests of TICO
over the condominium units on June 3, 2002, at which date the notices of levy

12
Id . at 161, 172 and 259-260.
13
Id . at 183-186 and 260.
14 Id.
15
Id at 169-180 and 261.
16
Id. at 166-167 and 260-26 I.
Decision 4 G.R. No. 204226

'

on execution were annotated on the CCTs of the condominium units, after the
one-year period of redemption expired without TICO having redeemed the
same. 17

The BIR's Claims:

For its part, the BIR alleged that on January 31, 2000, it served on TICO
several final assessment notices for its alleged deficiency in internal revenue
taxes, namely income tax, annual registration fee, value-added tax, percentage
tax, withholding tax on wages, expanded withholding tax, and documentary
stamp tax, for the calendar years 1996 and 1997, amounting to a total amount
of P73,020,590.12. TICO protested the said deficiency tax assessment on March
2, 2000, but the protest was denied for lack of merit. However, in view of the
protest, TICO's tax liabilities was reduced to P69,479,440.59. 18

The BIR averred that TICO's tax liabilities remained unpaid. Thus, it
resorted to the issuance and service to TICO, and the Register of Deeds of
Makati City, of a warrant of distraint and/or levy on the real and personal
properties of TICO, and a notice of tax lien covering CCT Nos. 39452 and
39453. On February 15, 2005, the BIR caused the annotation of the notice of
tax lien on CCT Nos. 39452 and 39453. 19 Moreover, the BIR posited that it has
a superior claim over the condominium units, considering its claim for unpaid
revenue taxes enjoys absolute preference under Articles 2241(1), 2242 (1), and
2246-2249 of the New Civil Code, and a tax lien over TICO's properties had
already attached at the time the assessments were made. 20

Ruling of the RTC Maka ti:

On March 25, 2008, RTC Makati rendered a Decision21 holding that the
claim of BIR over the condominium units is superior to that of Glowide and
PMI. The relevant portion of the RTC Makati' s March 25, 2008 Decision
provides:
What remains in issue is: to whom should the properties subject of this
action, be given in payment of plaintiffs obligation. In the resolution of this issue
the provisions of the Civil Code on concurrence and preference of credits apply.
Under Article 2242 of the Civil Code (with respect to specific real property),
Taxes are given preference with respect to claims enumerated in Art. 2241 and
2242, only the claims for taxes are given preference over the other enumerated
claims. The latter shall have the same preference and rank will accordingly be
paid pro rata xxx. Except for taxes, the credits listed in Art. 2242 when they
concur with respect to specific real prope1iies, shall be satisfied pro rata x x x.

17
Id. at 45.
18
Id. at 45-46.
19 Id. at 46 and 97.
20 Id. at 46.
21 Id. at 181-182.
Decision 5 G.R. No. 204226

On the basis of and pursuant to the foregoing, defendant BIR has the
preferred claim to the subject properties. With respect to costs and expenses
recoverable in the action, plaintiff is deemed to have waived the same when it
failed to pursue the same and instead, filed a Manifestation stating that plaintiff's
purpose in filing his action is for the Court to determine who as between the two
defendants is entitled to the properties subject hereof, hence, dispensing with the
submission if the M[e]morandum agreed upon.

SO ORDERED. 22 (Citations omitted)

Glowide and PMI filed a Motion for Reconsideration of the RTC's

Decision, which was denied in its July 19, 2008 Order. 23 Aggrieved, Glowide
and PMI appealed the case to the CA. 24

Ruling of the Court of Appeals:

In its December 16, 2011 Decision, 25 the CA ruled in favor of Glowide and
PMI. The dispositive portion states:

WHEREFORE, the assailed March 25, 2008 Decision and June 19, 2008
Order of the RTC of Makati City, Branch 145 in Special Civil Case No. 06-667
are REVERSED and SET ASIDE. In lieu thereof, a new one is rendered
declaring the validity of auction sale of the Condominium Units subject of the
instant case, which retroacts to the date of the annotation of the Notice of Levy
on Attachment, and that GLOWIDE and PMI, as against BIR, have superior right
over the subject condominium units, hence, entitled to the same.

SO ORDERED. 26

The CA ruled that Glowide and PMI are entitled to the possession and
conveyance of the condominium units, since their rights over the condominium
units which revert to the date of the annotation of the levy on attachment, i.e.,
December 22, 2000, are superior to the BIR's claim, since the latter's notice of
tax lien on CCT Nos. 39452 and 39453 was annotated only on February 15,
2005. 27 The CA further opined that TICO's resort to an action for interpleader
is improper since Glowide and PMI had already succeeded in securing a
favorable final judgment against TICO, and the institution of the complaint for
interpleader gave occasion for the RTC Makati and RTC QC to render
conflicting rulings. 28

z2 Id.
23
Id. at 47.
24
Id. at 47.
25
Id. at 43-58.
26
Id. at 57.
27
Id.at48-5I.
28
Id. at 53-54.
Decision 6 G.R. No. 204226

The BIR belatedly filed its Motion for Reconsideration. In its October 22,
2012 Resolution, 29 the CA denied the BIR's Motion for Reconsideration for
lack of merit.

Hence, this petition. 30

Issues

The main issues for resolution are:

1. Whether the BIR's petition should be dismissed on technical grounds;

2. Whether TICO's complaint for interpleader is improper; and

3. Which between the BIR, on the one hand, and Glowide and PMI, on
the other, is entitled to ownership of the condominium units.

Our Ruling

The Court denies the petition.

The BIR's failure to timely file a

motion for reconsideration of the
CA's December 16, 2011 Decision
rendered the same final and
immutable.

GLOWIDE and PMI assert that the BIR' s failure to timely file a motion
for· reconsideration rendered the CA' s December 16, 2011 Decision final and
executory. 31 While the BIR admits that it filed its motion for reconsideration
with the CA one day after the expiration of the period for filing such motion, it
maintains that the issue has been settled by the CA in its February 21, 2012
Resolution, which admitted the motion for reconsideration in the interest of
justice, and its October 22, 2012 Resolution which dismissed the motion for
lack of merit. 32 Moreover, the BIR maintains that the Court may still give due
course to the instant petition, and resolve the case according to its merits in the
interest of substantialjustice. 33

We agree with Glowide and PMI.

29
Id. at 59-60.
30
Id. at 29-31 and 301-329.
31
Id. at 103-107.
32
Id. at 61-62, 67-68 and 306-307.
33
Id. at 307-311.
 Decision 7 G.R. No. 204226

It is settled that the perfection of an appeal in the manner and within the
period prescribed by law is not only mandatory but jurisdictional. This means
that the failure to interpose a timely appeal deprives the appellate body of any
jurisdiction to alter the final judgment, more so to entertain the appeal. Once a
decision attains finality, it becomes the law of the case irrespective of whether
the decision is erroneous or not, and no court - not even the Supreme Court
- has the power to revise, review, change or alter the same. 34 The right to
appeal is not a part of due process oflaw, but is a mere statutory privilege to be
exercised only in the manner, and in accordance with, the provisions of the law.
After a decision is declared final and executory, vested rights are acquired by
the winning party. 35

In the same vein, "a motion for reconsideration must necessarily be filed
within the period to appeal. When filed beyond such period, the motion for
reconsideration ipso facto forecloses the right to appeal." 36 "Under Section 1,
Rule 52 of the Rules of Court, a motion for reconsideration of a judgment or
final resolution should be filed within 15 days from notice. If no appeal or
motion for reconsideration is filed within this period, the judgment or final
resolution shall forthwith be entered by the clerk in the book of entries of
judgment, as provided under Section 10 of Rule 51. The 15-day reglementary
period for filing a motion for reconsideration is non-extendible." 37

Provisions of the Rules of Court prescribing the time within which certain
acts must be done, or certain proceedings taken, are absolutely indispensable to
the prevention of needless delays, and to the orderly and speedy discharge of
judicial business. While this Court has previously allowed the liberal
application of procedural rules, these are exceptions that are sufficiently
justified by meritorious and exceptional circumstances attendant therein, which
are notably not present in the instant petition. Not every plea for relaxation of
rules of procedure shall be granted by the Court for it will render such rules
inutile. 38

Significantly, the BIR failed to adduce any cogent or exceptional reason

that would warrant the liberal application of the rules. It merely invoked the
inadvertence of its counsel's Document Management Division in failing to file
its motion for reconsideration on time. However, a counsel's tardiness in
complying with reglementary periods for filing pleadings that are attributed to
the negligence of said counsel's secretary or clerk is not a valid reason. 39 "It is

34 See Mitsubishi Motors Phils. Corp. v. Bureau of Customs, 760 Phil. 954, 963-964 (2015).
35 See Allied Banking Corp. v. Spouses Eserjose, 484 Phil. 159, 170-171 (2004).
36 Ponciano, Jr. v. Laguna Lake Development Authority, 591 Phil. 194,212 (2008).
37
Barrio Fiesta Restaurant v. Beronia, 789 Phil. 520, 534-535 (2016).
38 See Ponciano, Jr. v. Laguna lake Development Authority, supra at 209.
39
Id. at210-21 I.
Decision 8 G. . No. 204226

the counsel's duty to adopt and to strictly maintain a system that ensures that
all pleadings should be filed and duly served within the period; a d if he fails
to do so, the negligence of his secretary or clerk to file such pleading is
imputable to the said counsel. " 40

That the motion for reconsideration was filed only one day late is
immaterial; the Court has similarly refused to admit motions for reconsideration
which were filed late without sufficientjustification. 41 Indeed, "[j]ust as a losing
party has the right to appeal within the prescribed period, the winning party has
the correlative right to enjoy the finality of the case." 42

In fine, the BIR' s failure to seasonably file its motion for reconsideration
rendered the December 16, 2011 Decision of the CA final and executory, and
beyond the courts' power to amend or revoke. Moreover, even if the petition is
not dismissed due to its procedural infirmity, a careful study of the other issues
clearly shows that the petition should be denied for lack of merit.

TICO's interpleader complaint is

improper since it amounts to a
collateral attack on the final and
executed judgment in favor of
Glowide and PMI.

Glowide and PMI assert that TICO's complaint for interpleader is

improper since it collaterally attacks a final and executed judgment in favor of
Glowide and PMI. 43 The BIR counters that the suit for interpleader is proper
since it is only intended to determine which of TICO's creditors had a better
right to its condominium units, which are the only properties left that TICO may
dispose of to pay its outstanding debts to different creditors, in contrast to the
earlier case which only determined TICO's liability to Glowide and PMI. 44

The special civil action of interpleader is designed to protect a person

against double vexation in respect of a single liability. It requires, as an
indispensable requisite, that conflicting claims upon the same subject matter are
or may be made against the stakeholder (the possessor of the subject matter)
who claims no interest whatsoever in the subject matter or an interest which in
whole or in part is not disputed by the claimants. Through this remedy, the
stakeholder can join all competing claimants in a single proceeding to determine
conflicting claims without exposing the stakeholder to the possibility of having

40 Spouses Sumndad v. Friday's Holdings, Inc., G.R. No. 235586, January 22, 2020.
41 See Rivera-Avante v. Rivera, G.R. No. 224137, April 3, 2019, citing Ponciano, J1'. v. Laguna Lake
Development Authority, supra note 36 at 209.
42 Allied Banking Corp. v. Spouses Eserjose, supra at 171.
43
Rollo, pp. 279-280.
44
Id. at 35.
 Decision 9 G.R. No. 204226

to pay more than once on a single liability. "In short, the remedy of interpleader,
when proper, merely provides an avenue for the conflicting claims on the same
subject matter to be threshed out in an action." 45

However, a successful litigant who has secured a final judgment in its

favor cannot later be imp leaded by its defeated adversary in an interpleader suit,
and compelled to prove its claim anew against other adverse claimants, as that
would in effect be a collateral attack upon the judgment. 46 In other words, an
action for interpleader may not be utilized to circumvent the immutability of a
final and executory judgment. It is settled that when a decision has attained
finality, it "may no longer be modified in any respect, even if the modification
is meant to correct erroneous conclusions of fact and law." 47 The doctrine is
grounded on the public policy that at the risk of occasional errors, litigation
should end at some definite date fixed by law. 48 "This is a fundamental principle
in our justice system, without which there would be no end to litigations.
Utmost respect and adherence to this principle must always be maintained by
those who exercise the power of adjudication. Any act, which violates such
principle, must be immediately struck down." 49 While the rule admits of
exceptions, none obtains in this case. so

Thus, in Wack Wack Golf & Country Club, Inc. v. Won, 51 we ruled that an
interpleader suit to determine the ownership of a membership fee certificate is
barred by !aches since the party who initiated the suit filed the same when it
had already been held independently liable in a final and executory suit by one
of the claimants. The Court observed therein that the suit for interpleader may
not prosper since it is a collateral attack upon a final judgment in favor of one
of the claimants:

A stakeholder should use reasonable diligence to hale the contending

claimants to court. He need not await actual institution of independent suits
against him before filing a bill of interpleader. He should file an action of
interpleader within a reasonable time after a dispute has arisen without

45
Bank of Commerce v. Planters Development Bank, 69S Phil. 627, 671-672 (2012). Section 1, Rule 62 of the
Rules of Court provides:
SECTION 1. When interpleader proper. - Whenever conflicting claims upon the same
subject matter are or may be made against a person who claims no interest whatever in the subject
matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an
action against the conflicting claimants to compel them to interplead and litigate their several
claims among themselves.
46
See Wack Wack Golf & Country Club, Inc. v. Won, 162 Phil. 233, 247-249 (1976).
47
FGU Insurance Corp. v. Regional Trial Court ofMakati City, Branch 66, 6S9 Phil. 117, 123 (2011).
48
See Filipro, Inc. v. Permanent Savings & Loan Bank, S34 Phil. SS I, 560 (2006), citing Ramos v. Combong
Jr., 510 Phil. 277,282 (2005).
49
Aromin v. Heirs ofSomis, G.R. No. 204447, May 3, 2021.
50
The following are exceptions to the doctrine of finality or immutability of judgments: (1) the correction of
clerical errors, (2) nunc pro tune entries that cause no prejudice to any party, (3) void judgments, and (4)
whenever circumstances transpire after the finality of the decision that render its execution unjust and
inequitable (FGU Insurance Corp. v. Regional Trial Court ofMakati City, Branch 66, supra, citing Villa v.
Government Service Insurance System, 619 Phil. 740, 750 [2009]).
51
Supra.
Decision 10 G.R. No. 204226

waiting to be sued by either of the contending claimants. Otherwise, he may

be barred by !aches or undue delay. But where he acts with reasonable
diligence in view of the enviromnental circumstances, the remedy is not barred.

Has the Corporation in this case acted with diligence, in view of all the
circumstances, such that it may properly invoke the remedy of interpleader? We
do not think so. It was aware of the conflicting claims of the appellees with
respect to the membership fee certificate 201 long before it filed the present
interpleader suit. It had been recognizing Tan as the lawful owner thereof.
It was sued by Lee who also claimed the same membership fee certificate.
Yet it did not interplead Tan. It preferred to proceed with the litigation ( civil
case 26044) and to defend itself therein. As a matter of fact, final judgment
was rendered against it and said judgment has already been executed. It is
now therefore too late for it to invoke the remedy of interpleader.

It has been held that a stakeholder' s action of interpleader is too late when
filed after judgment has· been rendered against him in favor of one of the
contending claimants, especially where he had notice of the conflicting claims
prior to the rendition of the judgment and neglected the opportunity to implead
the adverse claimants in the suit where judgment was entered. This must be so,
because once judgment is obtained against him by one claimant he becomes
liable to the latter xxx.

xxxx

Indeed, if a stakeholder defends a suit filed by one of the adverse

claimants and allows said suit to proceed to final judgment against him, he
cannot later on have that part of the litigation repeated in an interpleader
suit. In the case at hand, the Corporation allowed civil case 26044 to proceed to
final judgment. And it offered no satisfactory explanation for its failure to
implead Tan in the same litigation. In this factual situation, it is clear that this
interpleader suit cannot prosper because it was filed much too late.

xxxx

In fine, the instant interpleader suit cannot prosper because the

Corporation had already been made independently Hable in civil case 26044
and, therefore, its present application for interpleader would in effect be a
collateral attack upon the final judgment in the said civil case; the appellee
Lee had already established his rights to membership fee certificate 201 in
the aforesaid civil case and, therefore, this interpleader suit would compel
him to establish his rights anew, and thereby increase instead of diminish
litigations, which is one of the purposes of an interpleader suit, with the
possibility that the benefits of the final judgment in the said civil case might
eventually be taken away from him; and because the Corporation allowed
itself to be sued to final judgment in the said case, its action of interpleader
was filed inexcusably late, for which reason it is barred by laches or
unreasonable delay. 52 (Emphases supplied)

52
Id.at241-250.
Decision 11 G.R. No. 204226

· In light of the foregoing, the Court agrees with the findings of the CA that
the filing of the instant complaint is improper, since it is a belated attempt on
TI CO' s part to assail the final and executed judgment in favor of G lowide and
PMI. Aside from the October 3, 2001 Judgment in Civil Case No. Q-00-42328,
which ruled in favor ofGlowide and PMI, the RTC QC in its February 16, 2004
Order had previously ruled that Glowide and PMI's credits enjoy preference
over BIR's claim over the condominium units. This was then affirmed by the
CA in its August 23, 2007 Decision, which became final and executory.
Moreover, despite knowledge of its unpaid tax liabilities with the BIR, TICO
failed to implead the BIR in the proceedings before the RTC QC, and initiated
the complaint for interpleader only after it was defeated in the said proceedings.
As a result, the interpleader suit has forced Glowide and PMI to defend their
rights anew over the condominium units, and has unduly deferred their right to
a satisfaction of their claims under a final court decision in their favor. Verily,
the RTC Makati should not have allowed TICO to disturb the final and executed
ruling in Glowide and PMI's favor through an interpleader suit.

Moreover, it is settled that a court has no power to modify or interfere with

the judgment or order of another co-equal court, "as that action may lead to
confusion, and seriously hinder the administration of justice." 53 Here, the
improper filing of the subject complaint gave occasion for RTC Makati - a co-
equal court - to render a conflicting ruling against the RTC QC's February
16, 2004 Order, which already ruled that Glowide and PMI's credits enjoy
preference over the condominium units vis-a-vis the claims of other creditors
ofTICO. True enough, RTC Makati's decision in the subject complaint where
it held that the BIR' s claim should be preferred over those of Glowide and PMI,
is clearly inconsistent to that of RTC QC' s February 16, 2004 Order.

For the foregoing reasons, RTC Makati should have already dismissed
TICO's complaint for interpleader. Even assuming that TICO's filing of the
interpleader complaint is proper, a review of the applicable laws inevitably
shows that Glowide and PMI has superior rights over the condominium units.

GLOWIDE and PMl's rights

over the condominium units are
superior to the BIR's claim, and
are thus entitled to possession.
and conveyance of the
condominium units.

The BIR avers that its annotation of the notice of tax lien before the
Register of Deeds on February 15, 2005, retroacts to the date when the BIR
assessed TICO of tax liabilities, i.e., January 31, 2000, which is earlier than the
54
notice of levy annotated by GLOWIDE and PMI on December 22, 2000.

53 Genato Investments, inc. v. Barrientos, 739 Phil. 642,650 (2014).

54
Rollo, pp. 25-34.
Decision 12 G.R. No. 204226

GLOWIDE and PMI maintain that they have valid and superior rights to the
condominium units, since BIR' s tax lien was annotated on the titles of the
condominium units when the properties had already been purchased by
GLOWIDE and PMI in an auction sale. Moreover, since the auction or
execution sale retroacts to the date oflevy of the lien on attachment, GLOWIDE
and PMI acquired all rights, title, and claim over the condominium units on
December 22, 2000, before the same was burdened with any registered claim of
the BIR. 55

On the other hand, TICO manifests that the condominium units are in the
possession of the Insurance Commission for its preservation. It reiterates that
TICO filed the action for interpleader since Glowide and PMI have attached the
properties while the BIR issued a warrant of distraint and levy for TICO's
aggregate tax liabilities, and leaves the resolution of the case to the sound
judgment of the Court. 56

We rule for Glowide and PMI.

It is settled that execution is enforced by the fact of levy and sale. As a

result of such execution, title over the subject property vests immediately in the
purchaser, subject only to the right to redeem the property within the period
provided by law. While the right acquired by the purchaser at
an execution sale is inchoate, and does not become absolute until after the
expiration of the redemption period without the right of redemption having
been exercised, the purchaser's right is still entitled to protection, and must be
respected until extinguished by redemption. If there is a failure to redeem the
subject property within the period allowed by law, the redemptioner is divested
of its rights over the property. 57

In the case at bench, the judgment in Civil Case No. Q-00-42328 in favor
of Glowide and PMI has already attained finality, and enforced through the sale
of the condominium units to Glowide and PMI. The corresponding certificate
of sale was issued, and also annotated on the certificates of title of the
condominium units in April 2004. As a result of the execution sale, title to the
condominium units vested immediately in Glowide and PMI, subject only to
TICO's right to repurchase. 58 When TICO failed to redeem the property after
the expiration of the redemption period, it was divested of its rights over the
condominium units, and the sheriff of RTC QC executed the corresponding
final deed of sale in favor of Glowide and PMI on April 15, 2005.

Moreover, "the prior registration of a lien creates a preference as the act of

registration is the operative act that conveys and affects the land, even against
subsequent judgment creditors." 59 An auction sale conducted pursuant to an

55 Id. at 96 and 107-118.

56
Id at 203-204.
57 See Spouses Ching v. Family Savings Bank, 649 Phil. 84, 98 (20 I 0).
58 See Heirs of Blancaflor v. Court ofAppeals, 364 Phil. 454, 462-463 (I 999).
59 G Holdings, Inc. v. National Mines and Allied Workers Union Local I 03, 619 Phil. 69, I 02-103 (2009).
 Decision 13 G.R. No. 204226
.
or~er of execution retroacts to the date of annotation of the levy on attachment,
and the purchaser in the auction sale has the concomitant right to have a
certificate of title issued in his favor on the basis thereof as if it were annotated
on the same date. Further, the annotation of the levy on attachment, or on
execution, creates a preference that retroacts to the date of the levy. 60 Hence,
even if a prior unregistered sale is subsequently registered before the sale on
execution but after the levy is made, the validity of the execution sale should be
upheld because it retroacts to the date oflevy. "The priority enjoyed by the levy
on attachment extends, with full force and effect, to the buyer at the auction sale
conducted by virtue of such levy." 61 When the condominium units were sold on
execution to Glowide and PMI in 2004, the sale - and the rights acquired by
Glowide and PMI when it purchased the condominium units - retroacted to the
date of inscription of their notice of levy on December 22, 2000.

On the other hand, the Tax Code 62 provides that a tax lien is enforceable
against all property and rights to property belonging to the taxpayer, and
retroacts to the time when the tax assessment was made. However, the tax lien
shall not be valid against any judgment creditor until notice of such lien is filed
with the Register of Deeds of the city, or province, where the taxpayer's
properties are located:

Section 219. Nature and Extent of Tax Lien. - If any person, corporation,
partnership, joint-account (cuentas en participacion), association or insurance
company liable to pay an internal revenue tax, neglects or refuses to pay the same
after demand, the amount shall be a lien in favor of the Government of the
Philippines from the time when the assessment was made by the Commissioner
until paid, with interests, penalties, and costs that may accrue in addition thereto
upon all property and rights to property belonging to the taxpayer: Provided,
That this lien shall not be valid against any mortgagee, purchaser or
judgment creditor until notice of such lien shall be filed by the
Commissioner in the office of the Register of Deeds of the province or city
where the property of the taxpayer is situated or located. (Emphasis supplied)

The proviso in Section 219 of the Tax Code precludes any effect of the tax
lien against any judgment creditor prior to the annotation of the tax lien on the
title of the property concerned. In other words, it is only after the notice of tax
lien is annotated on the pertinent title that a judgment creditor's rights can be
affected and the tax lien may be considered to retroact to the date of assessment.
Guided by the foregoing, the BIR's tax lien could only have been enforceable
against Glowide and PMI when it annotated its tax lien on February 15, 2005,
which was already after the annotation of their levy on attachment and sale of
the condominium units in Glowide and PMI's favor. At this point, Glowide and
PMI already had rights over the condominium units, subject only to TICO's
right of redemption. Moreover, considering GLOWIDE and PMI's rights over

60
See Spouses Cavil es v. Spouses Bautista, 377 Phil. 25, 35-36 ( 1999); Guerrero v. Agustin, 117 Phil. 784, 788
( 1963).
61
Binan Steel Corp. v. Court ofAppeals, 439 Phil. 688, 699-701 (2002).
62
Entitled "AN Acr AMENDING THE NATIONAL INTERNAL REVENUE CODE, As AMENDED, AND FOR OTHER
PURPOSES." Approved: December 11, 1997.
Decision 14 G.R. No. 204226

the condominium units retroact to December 22, 2000, the condominium unjts
may no longer be considered TICO's property when the BIR annotated its tax
lien in 2005. Glowide and PMI could no longer be bound by the BIR's tax lien,
which only became valid against judgment creditors after Glowide and PMI had
already taken effective rights, control, and possession over the property in
question.

Notwithstanding the foregoing, the BIR maintains that it has a superior

right over the claim of Glowide and PMI, since the proceedings which gave rise
to the latter's claim, and alleged ownership over the condominium units, are
void. It avers that the liquidator of TICO was not furnished with any notice
commanding it to pay the judgment obtained by Glowide and PMI in Civil Case
No. Q-00-42328, in violation of Section 9, Rule 39 of the Rules of Court, and
was not aware of such claim prior to the levy of the condominium units; thus,
the levy of properties ofTICO by Glowide and PMI could not have produced a
lien on the said properties. 63 However, the question of whether or not the sheriff
demanded payment of the judgment credit from TICO or its liquidator, is a
factual issue beyond the purview of a Rule 45 petition. 64 The BIR also failed to
adduce evidence to prove this contention. In the absence of contrary evidence,
what will prevail is the presumption that the sheriff regularly performed his or
her official duties. 65

The BIR also maintains that the writ of execution varied the order that it
seeks to enforce since the writ was addressed to the sheriff, in contrast to the
May 15, 2002 Order of RTC QC which provides that "all monetary claims
against defendant should be coursed thru the "conservator[,]" and "a writ of
execution be issued against [TICO] thru Atty. Rommel A. Frias, appointed
Conservator." 66 This contention is misplaced. It is basic that a sheriff or other
proper officer to whom the writ was issued has the duty to enforce the writ
according to its terms. 67 Sheriffs play an important part in the administration of
justice, because they are tasked to execute the final judgments of
courts. "When a writ is placed in the hands of the sheriff, it is his or her duty,
in the absence of any instructions to the contrary, to proceed with reasonable
celerity and promptness to implement it in accordance with its mandate." 68

63
Rollo, pp. 17-25.
64 This Court is not a trier of facts. The function of the Court in petitions for review on certiorari under Rule
45 of the Rules of Court is limited to reviewing errors of law that may have been committed by the lower
courts. As a matter of sound practice and procedure, the Court defers and accords finality to the factual
findings of trial courts. To do otherwise would defeat the very essence of Rule 45 and would convert the
Cowi into a trier of facts, which is not its intended purpose under the law (Daniel v. Magkaisa, G.R. No.
203815, December 7, 2020).
65
See De la Cruz v. Bato, 491 Phil. 512, 519 (2005).
66
Rollo, pp. 17-25.
67 Section 8, Rule 39 of the Rules of Civil Procedure reads, in paii:
Section 8. hsuance, form and contents of a writ of execution. - The writ of execution
shall: (1) issue in the name of the Republic of the Philippines from the court which granted the
motion; (2) state the name of the court, the case number and title, the dispositive part of the
subject judgment or order; and (3) require the sheriff or other proper officer to whom it is
directed to enforce the writ according to its terms, in the manner hereinafter provided xx x
(Emphasis supplied)
68
De La Cruz v. Balo, supra at 518.
 Decision 15 G.R. No. 204226
.
Here, the writ of execution was properly addressed to the sheriff who duly
implemented it by levying on the condominium units, and selling the
condominium units to Glowide and PMI. Moreover, TICO's conservator may
not be considered as an "other proper officer" who should carry out the writ of
execution. As observed by the CA, it would be highly irregular if the writ of
execution was addressed to the conservator, who was appointed by the
Insurance Commission, and who acted as TICO's counsel-representative during
the proceedings before RTC QC. He certainly could not be expected to
implement a final judgment of the R TC QC, the validity of which was
subsequently assailed by TICO, the party he represents, before the CA. In truth,
the RTC QC's May 15, 2002 Order merely intended that the sheriff, in
implementing the writ of execution, should notify or deal solely with TICO's
conservator, and not any other officers of TICO. Thus, contrary to the BIR's
assertion, the writ of execution conformed to the RTC QC's May 15, 2002
Order in Civil Case No. Q-00-42328.

Even assuming arguendo that the proceedings were valid, the BIR
maintains that its claim is still preferred over Glowide and PMI's claim, since
it enjoys absolute preference over any other claims pursuant to Articles 2241,
2242 (1 ), and 2246 to 2249, of the Civil Code, which provide that tax claims
have preference over any other claim of any other creditor in respect of any, and
all properties, of the insolvent. 69 This contention has no merit.

Under the system of concurrence and preference of credits, which finds

application in insolvency proceedings, "credits are classified into three general
categories: (a) special preferred credits listed in Articles 2241 70 and 2242, 71 (b)
ordinary preferred credits listed in Article 2244, and ( c) common credits under
Article 2245. The special preferred credits enumerated in Articles 2241 (with
respect to movable property) and 2242 (with respect to immovable property)
are considered as mortgages or pledges of real or personal property, or liens
within the purview of Act No. 1956. 72 These credits, which enjoy preference
with respect to a specific movable or immovable property, exclude all others to
the extent of the value of the property.xx xx Credits which are specially

69
Rollo, pp. 25-34 .
°
7
CIVIL CODE, Art. 2241 reads, in part:
ART. 2241. With reference to specific movable property of the debtor, the following
claims or liens shall be preferred:
(I) Duties, taxes and fees due thereon to the State or any subdivision thereof; x xx
71
CIVIL CODE, Art. 2242 reads, in part:
ART. 2242. With reference to specific immovable property and real rights of the debtor,
the following claims, mortgages and liens shall be prefe1Ted, and shall constitute an
encumbrance on the immovable or real right:
(I) Taxes due upon the land or building;
xxxx
(7) Credits annotated in the Registry of Property, in virtue of a judicial order,
by attachments or executions, upon the property affected, and only as to later
credits[.]
72
Entitled "AN ACT PROVIDING FOR THE SUSPENSION OF PAYMENTS, THE RELIEF OF INSOLVENT DEBTORS, THE
PROTECTION OF CREDITORS, AND THE PUNISHMENT OF FRAUDULENT DEBTORS," approved May 20, 1909.
Decision 16 G.R. No. 204226

preferred because they constitute liens (tax or non-tax) in turn take precedence
over ordinary preferred credits so far as [they concern] the property to which
the liens have attached. The specially preferred credits must be discharged first
out of the proceeds of the property to which they relate, before ordinary
preferred creditors may lay claim to any part of such proceeds. In contrast with
Articles 2241 and 2242, A1iicle 2244 creates no liens on determinate property
which follow such property. What Article 2244 creates are simply rights in
favor of certain creditors to have the cash and other assets of the insolvent
applied in a certain sequence or order of priority." 73

Guided by the foregoing, the Court finds no reason to depart from the CA' s
findings that Glowide and PMI's claim is preferred over the BIR's. TICO's tax
claim is only an ordinary preferred credit under Article 2244 since it is not based
on taxes due on the condominium units but on TICO's deficiency in payment
of its income tax, annual registration fees, value'"added tax, percentage tax,
withholding tax on wages, expanded withholding tax, and documentary stamp
tax. On the other hand, Glowide and PMI's claim is a special preferred credit
under Aiiicle 2242 (7) of the Civil Code, and thus superior to BIR's tax claim
which is only an ordinary preferred credit. Indeed, "[ d]uties, taxes, and fees due
the Government enjoy priority only when they are with reference to a specific
movable property, under Article 2241(1) of the Civil Code, or immovable
property, under Article 2242(1) of the same Code. However, with reference to
the other real and personal property of the debtor, sometimes referred to as "free
property," the taxes and assessments due the National Government, other than
those in Articles 2241(1) and 2242(1) of the Civil Code, will come only in ninth
place in the order of preference." 74

All told, the Court finds no cogent reason to reverse the CA' s Decision.
More than two decades have passed since Glowide and PMI sought legal
recourse to recover their claim from TICO, which was unduly and grossly
delayed by TICO's interpleader complaint. It is about time to write finis to the
present dispute.

WHEREFORE, the petition for review is DENIED. The December 16,

2011 Decision and the October 22, 2012 Resolution of the Court of Appeals in
CA-G.R. CV. No. 91856 are hereby AFFIRMED.

73 Metropolitan Bank and Trust Company v. S.F Naguiat Enterprises, Inc., 756 Phil. 229, 244-248 (20!5).
74 In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet), Inc., 540 Phil. 142,
168 (2006). Civil CODE, A1i. 2244 reads, in part: , .
Art. 2244. With reference to other prope1iy, real and personal, of the debtor, the followmg
claims or credits shall be prefen-ed in the order named:
xxxx
(9) Taxes and assessments due the national govemment, other than those
mentioned in A1iicles 2241, No. 1, and 2242, No. 1;

Al
Decision 17 G.R. No. 204226

SO ORDERED.

Associate Justice

WE CONCUR:

Aill'U~
ESTELA M. PE,LAS-BERNABE
Senior Associate Justice
Chairperson

JHO~LOPEZ :ARB. DIMAA

Associate Justice Associate Justice

J
~~
ASP. MARQUEZ
'Associate Justice
Decision 18 G.R. No. 204226

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

ESTELA M. P~~RNABE
Senior Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.